Blue Cross Blue Shield of Texas members will no longer see in-network rates at CHI St. Joseph Regional Hospital in Bryan and CHI St. Joseph Health College Station Hospital if officials do not come to an agreement over pricing by Dec. 16.
On June 17, CHI St. Luke’s Health issued BCBSTX a 180-day notice of termination with intent to renegotiate. CHI St. Luke’s Health, whose parent organization is CommonSpirit Health, is made up of 16 hospitals across Houston, Bryan-College Station and East Texas. This includes the Bryan and College Station CHI St. Joseph hospitals.
The termination will take effect Dec. 16 if the two entities can’t negotiate a deal, but until then, CHI St. Luke’s Health is in-network with BCBSTX.
BCBSTX is Texas A&M University System’s insurer.
Not many details can be shared since negotiations are ongoing, but BCBSTX’s Shara McClure said CHI St. Luke’s is looking to nearly double prices on its services in certain areas by the use of a series of increases through 2022. McClure is the Blue Cross Blue Shield divisional senior vice president for Texas Health Care Delivery.
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“What it feels like is that they want our customers to make up for other shortfalls that they’re experiencing,” McClure said. “I don’t think that’s a burden that our customers, who are already experiencing some economic problems, I don’t think that’s fair for them to bear.”
In a Tuesday interview, CHI St. Luke’s Health CEO Doug Lawson said he could not provide details on the increase they’re asking for, but stressed that they are aiming to continue to be recognized as “the high value health system for the Houston market” while also seeking fair reimbursement for their services.
“The Blue Cross Blue Shield of Texas reimbursement rates are 25% or more below our competitors’ rates,” he said. “Without an increase in our rates, our ability to continue to pay our employees a competitive rate for the work that they’re doing to support our community, our ability to ensure that our technology is modern and state of the art, and that our facilities are well maintained, is significantly impaired.”
Lawson said the negotiations began months ago, before the COVID-19 pandemic. He said CHI St. Luke’s Health is looking at reimbursement across all payers.
In fiscal year 2020, which ended in July, CHI St. Luke’s Health saw a net loss of $204 million, he said.
“Reviewing our rate structure is an annual process,” Lawson said. “The sense of urgency around effecting change in the rates has certainly been impacted by the realities of the COVID crisis, this recent pandemic. That being said, the data that we’re looking at today represents a very real issue for us, and I’m hopeful that we can work with the payer community to achieve fair and reasonable compensation for the hard work our providers are doing every single day.”
A CHI St. Luke’s Health spokesperson said that in 2019, more than 10,000 inpatient hospitalizations across the 16 hospitals in the Texas division were from BCBSTX members. BCBSTX members also had 150,000 outpatient visits and procedures.
McClure said BCBSTX put an offer on the table that increases prices, but not to the extent that St. Luke’s had previously outlined.
“We would like for them to accept what we’ve offered them,” she said. “We want to minimize any financial impact to our members. We don’t want premiums to rise unexpectedly. We want to make sure that we keep care affordable.”
BCBSTX members will receive a letter about the situation this week, McClure said.
According to the Houston Chronicle, UnitedHealthcare announced in October 2019 that it planned to terminate its contract with Houston Methodist, but ultimately the two announced a new contract in May. Additionally, the article states, Cigna and Memorial Hermann announced last year that they would terminate their agreement, but eventually the two created a new contract.
Venky Shankar, director of research at the Center for Retailing Studies at A&M’s Mays Business School, said that the situation with BCBSTX and CHI St. Luke’s Health is similar to these other instances in Houston, with the key difference being that this one is taking place during a pandemic.
He said it is unlikely that the two entities will split and believes this is all part of negotiating the rates.
Laura Dague, associate professor of health policy at the Bush School of Government and Public Service, expressed a similar sentiment, saying that someone is probably trying to gain negotiating power in their discussion.
“The community shouldn’t panic until these negotiations are finished,” she said.